This Deadline-Related Mistake May Be Costing You Money

According to a humor essay published in a 1955 issue of the Economist, Parkinson’s Law states that if you’re given a lot of time to do a task, you’ll find a way to fill it. The writer, Cyril Northcote Parkinson, based the eponymous law on his years in the British Civil Service.

There’s widespread belief in Parkinson’s adage, and research indicates why. Findings suggest that an employer relying on intuition will overestimate the amount of time it takes a worker to complete a close-ended task whose deadline is far off. Employers could overpay for the work as a result.

Associate Professor Oleg Urminsky and doctoral student Indranil Goswami attribute that miscalculation to biases learned in everyday life, where workers doing tasks that require more work—such as home renovations—are usually afforded more time to complete it. As a result, managers are heavily influenced by deadlines. “It seems that just because workers have more time to complete a task, managers assume they will take longer,” Urminsky says.

Urminsky and Goswami draw their results from a study consisting of seven experiments. To simulate a corporate environment, they asked some participants to act as workers while others acted as managers. The researchers had participants complete online jigsaw puzzles, and they timed how quickly workers completed tasks under a variety of deadlines.

Participants allowed longer to complete the jigsaw puzzles only took slightly more time to do so than participants allowed less time, according to the researchers. On the other hand, a longer deadline made managers expect that workers would take much longer than they actually needed.

Additionally, the researchers observed, the more time a worker in the study had to complete a task, the larger the task seemed to the manager. “A decision-maker perceives a greater scope of work when the deadline is longer,” the researchers write.

Careful time estimates, not biased by external deadlines, may create cost savings for companies. In another experiment, most participants in the manager role chose to pay workers given more time to complete a task an expensive flat-fee contract instead of a per-minute rate, thinking they would save money as a result. But because they overestimated the amount of time workers would need to do a task, the managers’ attempts to save money backfired, and they saved less money than they would have had they paid the workers a per-minute rate.

Urminsky points out this is because paying an employee or consultant a flat fee versus a time-based one can lead companies to overpay for projects—a result of incorrectly assuming the project will take a long time to complete. “Your intuition may be off in a systematic way,” Urminsky says. By succumbing to time-related biases, managers may choose to pay flat fees even when those are not the most economical option.

The findings may function as a call for managers to analyze external deadlines the way they would a spreadsheet. By being aware of the tendency to overestimate the time a project takes, and by basing time estimates on previous projects rather than deadlines, managers can plan and budget more realistically. It pays “not to think of things that have long deadlines as necessarily taking longer,” says Urminsky.

The researchers acknowledge, however, that some deadlines may need to be longer—not shorter. Past research has shown that “managers overestimate the time it will take for short tasks and underestimate the time for long tasks,” Urminsky says.